Crowdfunding may not be for everyone, here are some of the factors to consider

  • Compliance with securities law will add another layer of complexity running a small business
  • Principals may be personally liable and subject to lawsuits by shareholders
  • Shareholders will demand accountability from principals 
  • Venture Capital may not want to get involved with a company who initially raised capital with crowd funding. 
  • Transaction cost
Have a headache yet?  Don’t.  Once President Obama’s signs the Jobs Act into law, the SEC will create regulations that should cover most of the potential issues that entrepreneurs will need to consider before applying for crowdfunding.  The SEC will likely take between 6-9 months to write those regulations.  We will keep you posted as these regulations become available.
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Crowdfunding is set to become legal

Today the House passed the Jobs act (HR 3606).  Presumably President Obama will sign this bill into law, making crowd funding legal.  This is a huge gain for entrepreneurs and small investors.

For the individual investor this means access to new companies that have promising ideas that could change the world while making a profit.

For entrepreneurs, this will making the raising of capital a little easier.  Additionally, new companies can pre-sell their ideas/products to their eager consumers/investors.

It’s a very exciting time to be starting something new in the United States.